Gold prices in the domestic spot and futures market are set to head lower on Wednesday as the global market nervously awaits the decision of the US Fed Reserve on the stimulus programme.
The US Fed Reserve’s Open Market Committee meeting that began on Tuesday will end later in the day with the central bank issuing a statement on the outlook for its programme to buy bonds and other assets from the market pumping $75 billion a month.
The programme has been cut from $85 billion and the general expectation is that there could be further cut, of another $10 billion, given the signs of economic revival.
With Argentina and Turkey taking measures to control the devaluation of their currency and rebound in equities, the yellow metal is certainly under pressure.
In India, the Reserve Bank of India’s move to raise key interest rates will draw investments, strengthening the rupee. A strong rupee against the dollar makes import of gold, crude oil and vegetable oils cheaper.
Buying of physical gold in Asia could slow ahead of the Chinese holidays and due to buyers’ unease to pay higher prices. Holdings in SPDR Trust, the world’s biggest exchange-traded fund, were unchanged at 790.46 tonnes.
Spot gold, gold futures
By mid-day in Asia, spot gold ruled at $1,253.65 an ounce and gold contracts maturing for delivery in April at $1,253.40.
On NCDEX, spot gold had closed at Rs 29,715 for 10 gm on Tuesday.
On MCX and NCDEX, gold February contracts are likely to trade below Rs 29,900.
Crude oil stockpiles
Higher US stockpiles will drag crude oil prices in the domestic futures market.
In the global market, Brent crude for delivery in March fell to $107.40 a barrel and US crude for the same month to $97.17.
Oils and oilseeds market will head lower as concerns over soyabean crop in Brazil and Argentina ease. Brazil’s key growing area is likely to get dry weather in a week, helping the harvest. Wet weather in Argentina over the last few days is seen helping soyabean there.
Soyabean, crude palm oil
On Chicago Board of Trade, soyabean March contracts eased to $12.83 a bushel. Crude palm oil on Bursa Malaysia Derivatives Exchange opened higher at 2,538 ringgit or $764 a tonne.
Wheat could be range-bound as threat to the US winter wheat could be cancelled out by snow in the Black Sea region that will protect the crop from cold. Corn (maize) may head up as cold weather in the US hinders freight movement.
CBOT wheat maturing for delivery in March ruled at $5.66 a bushel and corn for delivery the same month at $4.31 a bushel.